On 1 September 2021, the Directorate General of Taxes (“DGT”) issued Regulation Number PER-18/PJ/2021 (“PER-18”) regarding “Implementation Instruction for Collecting Value Added Tax and Income Tax on Income/Delivery in Connection with Selling of Cellular Phone Prepaid Credit and SIM Card Starter Pack.”

The main points of PER-18 are summarized as follows:

1. Delivery of Cellular Phone Prepaid Credit and Starter Pack SIM Card by:
   1. Telecommunication Service Provider Entrepreneur to a Distribution Operator and/or telecommunication consumer shall be subject to VAT which is collected by the Telecommunication Service Provider Entrepreneur
   2. Distribution Operator of Level One to Distribution Operator and/or telecommunication consumer shall be subject to VAT which is collected by the Distribution Operator of Level One
   3. Distribution Operator of Level Two to Distribution Operator and/or telecommunication consumer shall be subject to VAT which is collected by the Distribution Operator of Level Two.
   4. Distribution Operator of the Next Level to Distribution Operator and/or telecommunication consumer shall be subject to VAT which is collected by the Distribution Operator of Level Two.
2. Sales of Cellular Phone Prepaid Credit and SIM Card Starter Pack by Distribution Operator of the Second Level shall be subject to Article 22 Withholding Income Tax (WHT) of 0.5%.
3. Collection of Article 22 WHT shall not apply on payment by Distribution Operators and/or telecommunication consumers in the following cases:
   1. With a maximum amount of Rp2.000.000 (two million rupiah) excluding VAT and not a split payment of a transaction of which the actual value is more than Rp2.000.000 (two million rupiah);
   2. Banking Taxpayer;
   3. Already hold and file a copy of Income Tax Certificate based on Government Regulation Number 23 of 2018, and it is already verified by the information system of the Directorate General of Taxation, or
   4. Already hold and file a copy of Letter of Exemption from Article 22 Withholding Income Tax in accordance with the provisions;
   5. runs other businesses in addition to selling Cellular Phone Prepaid Credit and SIM Card Starter Pack, and placed a deposit with a maximum amount of Rp60.000.000 (sixty million rupiah) excluding VAT in one tax period.

PER-18 became effective on 1 September 2021.